What is E-Business and does it matter?

Definitions and Emerging E-Business Models

What is E-Business?


Where do you draw the line?

   

Software; Book Car Mortgage

Measuring E-Business depends on how far you stretch the rubber band!

What is E-Business?


E-Commerce electronic transactions conducted by business partners (narrow definition) E-Business: buying and selling, servicing customers, collaborating with business partners, and conducting electronic transactions within an organisations Turban, Efraim, David King, Jae Lee and Dennis Viehland (2004) Electronic Commerce: A Managerial Perspective 2004. Pearson Prentice Hall, New Jersey

What is E-Business? 2


E-Commerce as digitally enabled commercial transactions between and amongst organisations and individuals E-Business refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm Laudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, Boston

What is E-Business 3


For this module, a broad definition of EBusiness is adopted It encompasses all internal and external electronically based activities and processes. E-commerce is part of E-Business, which focuses on the electronic commercial transactions between and amongst organisations and individuals

What is E-Business? continued

E-business is all about time cycle, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage -Lou Gerstner, ex CEO of IBM

What is E-Business continued.

  

  

Not just about dot coms and Internet only companies Transform existing businesses through the Internet and related technologies Integration within and between organisations break down barriers and boundaries Enabling new possibilities new ways of doing business - not possible in the past Origin go back several decades A wealth of knowledge already available through large research programmes

Dot Com Crash End of E-Business?

 

Underlying rapid growth has never stopped even during the dot com crash The Web has become an increasingly important part of consumers' everyday lives - shopping, banking, amusing, education Part of mainstream business culture, fulfilling its promise as a medium that can connect consumers and enterprises and cut red tape from transactions Pure plays versus multi-channels - Web sites are necessary for any business - even if the online arm loses money E-Commerce still only a small section of the economy (e.g. e-commerce < 5% of retailing) big bang yet to come Not the end the fun has just started !

Defining e-Business (contd)



Business can be defined as the organized effort of individuals to produce and sell, for a profit, products and services that satisfy society's needs. In a simple sense, then, e-business (electronic business) can be defined as the organized effort of individuals to produce and sell, for a profit, products and services that satisfy society's needs through the facilities available on the Internet.

Defining e-Commerce


e-commerce is a part of e-business; the term refers only to the activities involved in buying and selling online. These activities may include identifying suppliers, selecting products or services, making purchase commitments, completing financial transactions, and obtaining service.

A Framework for Understanding eBusiness

  

 

Telecommunications Infrastructure Internet Software Producers Online Sellers and Content Providers Global e-Business Small e-Business

Fundamental Models of eBusiness

  

Business-to-Business Model Business-to-Consumer Model Consumer-to-Consumer Model

A Business Model


A business model is a group of shared or common characteristics, behaviors, and methods of doing business that enables a firm to generate profits through increasing revenues and reducing costs.

Business-to-Business Model


Many e-businesses can be distinguished from others simply by their customer focus. For instance, some firms use the Internet mainly to conduct business with other businesses. These firms are generally referred to as having a business-to-business (B2B) model. Currently, the vast majority of ebusiness is B2B in nature.

Business-to-Consumer Model


In contrast to those firms using a B2B model, firms like Amazon and eBay are clearly focused on individual buyers and so are referred to as having a business-toconsumer (B2C) model.

Consumer-to-Consumer Model


Unlike the B2B and B2C models, which focus on business transactions and communications, the consumer-to-consumer (C2C) model involves the growing popular use of peer-to-peer (P2P) software that facilitates the exchange of data directly between individuals over the Internet.

Applying e-Business Strategies to Managerial, Marketing, and Financial Situations

 

Management Activities and Practices Marketing Applications and Solutions Financial Services and Solutions

The Future of e-Business: Growth, Opportunities, and Challenges

   

Measurements of Growth Convergence of Technologies Online Communities Partnering Online

Why E-Business? Why Now?



Demand Pull The New Economy

 

Information economy - Information content & labour over 60% New economics of information Convergence of computing, telecom & media Exponential growth of the Internet Mobile communications Mass, public infrastructure Individuality, interactivity, mobility & consumer experiences

Technological Push the ICTs Revolution

  

Rapid development of the Internet

 

 

Government Initiatives & Targets Others

Context for E-Business

 

 

All industries became information-intensive Information and communication are crucial to success of industrial & commercial operations Fast growing ICTs & information industries Profound Impacts on what activities locate where, how territories administered, markets served, linkages maintained between customers & suppliers Need for new strategies, business models & organisational designs

E-Business Models


E-Shops web marketing or a shop (B2C) E-Procurement E-tendering & procurement of goods and services E-Shopping Centres/E-Malls a collection of E-shops E-Auctions E-implementation of bidding mechanisms

E-Business Models .. continued



Virtual Communities members with common interests Collaboration Platforms tools & infor. environment for members to collaborate Third-Party Marketplaces leaving web marketing to third party Value-Chain Integrators

E-Business Models .. continued



Value-Chain Service Providers support part of value chain (e-logistics, e-payments) Information Brokerage, Trust and other services business information and consultancy; trusted third party services Others (e-betting/gambling; syndication )

Implications of E-Business:
Fundamental and Pervasive transformation
   

New strategy & business models New organisational designs New inter-organisational relations New work organisation and new ways of Working Others

Organisational implications


Two ways to beat competition and succeed in the market:

 

Product/service innovations Organisational/managerial innovations

 

Organisational innovations essential to efficiency and competitiveness Internet enables new organisational designs/new ways of doing business often in ways impossible in the past Within AND between organisations the entire value/supply chain/network

De-Construction of Integrated Businesses



What does your company really do?

  

Customer relationship business scope Product innovation and commercialisation businesses - speed Infrastructure management businesses - scale

Unnatural Bundle everything operate at sub-optimal level

Customer Relationship
  

Driven by scope economy Customer service-oriented culture Customisation developing relationship with them and understand their needs Offer as many products as possible to maximise selection for customers Tailor bundles of products and services to capture a larger share of wallet

Product Innovation & Commercialisation

 

Driven by speed the faster the better Using all possible distribution channels to reach customers Organisational culture geared to attract and retain creative talents Operations tailored to serve the needs of creative talents for breakthrough innovations

Infrastructure Management


Driven by scale economy pumping as many products through it as possible Full utilization of facilities & low cost operations Culture cost reduction & standardisation

Already Happening ... Transformational outsourcing



J.P. Morgan - IBM will take over most of the bank's computing operations - $5bn over 7 years Ford spin off Visteon computing on demand deal with IBM - $2bn over 10 years Telecom Italia HP will provide IT management services worth 225 million euros, or about US$243 million over 5 years Other functions and entire business processes increasingly being outsourced too

Organisational Design:
When is Virtual Virtuous?


   

Not all the smart people work for you market gives you access to them Internal capability vs. partners Short-term vs. long-term Autonomous vs. Systemic innovations Integrated companies vs. SMEs

Web/Cluster Strategy


  

Webs clusters of companies consolidate around a particular technology Examples Intel/Microsoft; SAPs integrated solutions; Spread risk, increase flexibility, enhance innovation, reduce complexity Conditions - technological standard & increasing returns Shapers and adapters choose your role Grow market share vs. grow the pie Unbundling & outsourcing

Internet Banking:
Cheap channel VS new business model?


Internet as a new cheap convenient distribution channel New entrants challenge the integrated banking model De-construction of the integrated banking processes Future scenarios?

Deconstruction of Telecom Value Networks

 

Boundaries increasingly eroded Traditional business model may not longer be sustainable Deconstruction of integrated value chains The emergence of new value networks Competing at multiple fronts

E-Government and E-Public Services



   

After ecommerce and e-business, the next Internet revolution will be e-government The Economist, 28 June 2000 USA - $600billion annual procurement spending EU euro720billion combined Big private sector companies typically achieve 20% saving by procuring online Slashing purchasing and fulfilment cycles and lower admin costs by up to 75% and halve stocks Potential to fundamentally change the way people relate to government!

Modernizing government in the UK



Better government, better policy making, better responsiveness to what people want and better public services by reforming the machinery of government in the UK- especially through the use of ICTs information age government Electronic service delivery to join up service provision across departmental boundaries, break down silo based delivery networks and allow citizens to interact with government whenever they choose Joined up working between different parts of government and provide new efficient and convenient ways for citizens and businesses to communicate with government E-Government targets - making 100% of services available electronically by 2005 almost achieved

Emerging issues in E-Government



 

All existing research shows in the UK joint up government providing joint up services is not happening yet? Public services - People as citizens or customers So far 85% all public sector IT projects are deemed to be failures (IBM worldwide head of government services) Purposes of E-Government stated and real

Emerging issues in E-Government (2)



E-Government and the redefinition of power structure and the buy-in from key stakeholders
 

Strong resistance from those negatively affected The practical feasibility of achieving joint up government ? efficiency gains could be translated into reduced employment in certain sections of the public sector (as many as 1 in 5 - 800,000!) clash with other strategic objectives of the Government such as full employment an issue that will need to be carefully addressed given that the public sectors are the biggest employers in many regions in the UK

Potential Conflicts between strategic objectives



What Next ?
    

Old established corporations will not disappear The new energetic dot.coms would not necessarily survive A new class of firms would emerge All organisations need to go through profound changes Prahalad, C K & Venkat Ramaswamy (2004) The Future of Competition. Harvard Business School Press, Boston